5G-driven mobile phone replacement to benefit demand for LCO batteries and materials

SHANGHAI, Dec 8 (SMM) — Production of mobile phones fell sharply this year due to COVID-19 outbreak. Over the next three years, the 5G trend will gradually drive mobile phone replacement and boost demand for lithium batteries and LCO. Hongguang MINI will also gain popularity in the first-tier and second-tier cities due to its price advantage and growing demand for new energy vehicles (NEVs), especially after Shanghai released a new policy that restricts travel by cars with non-local license plates.

Global marginal inventories of cobalt raw materials have declined since 2019, supporting the upward trend of cobalt prices. SMM sees cobalt prices between 260,000-320,000 yuan/mt in 2021 as global cobalt raw material inventories have tightened. Demand for lithium hydroxide is expected to increase significantly in Q2 and Q3 in 2021. Overseas NEV makers such as Tesla and Mercedes-Benz will focus on high-nickel batteries. Demand for lithium hydroxide is expected to increase 50% next year, which will effectively alleviate the current oversupply structure and the price will gradually increase.

The four major cathode materials will remain in oversupply, with a surplus of 185,000 mt expected in 2020. SMM predicts that the overall cathode material supply and demand structure will continue to deteriorate in 2021. The oversupply of ternary materials will intensify mainly due to severe overcapacity. On the other hand, supply growth of LFP and LMO will slow down and oversupply will gradually ease on the back of increasing demand from motive power, energy storage and small motive power markets.

5G trend drives demand growth of lithium batteries from mobile phones

Demand for LCO from global mobile phones to increase over the next 3 years

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